Connecting new GB data centres: Ofgem launches consultation to distinguish speculative projects from the viable

Amid wider grid connection reforms, in July 2026 Ofgem launched a consultation on proposed data centre connection reforms aimed at prioritising viable projects in the electricity connections queue and reducing the negative impacts of non-viable projects.

The consultation forms part of Ofgem's work with government, the National Energy System Operator (NESO) and network companies to develop reforms to the demand connections process around three core pillars: Curate, Plan and Connect. 

It puts forward the first formal Curate proposals, building on a series of coordinated steps since November 2025—including Ofgem's demand connections guidance, NESO's Call for Input on the demand queue, the government's Delivering AI Growth Zones policy paper, and DESNZ's March 2026 consultation on Plan measures to prioritise strategic demand. 

While some of these parallel consultations remain open or their outcomes outstanding, the July consultation gives us insight into Ofgem’s and the government’s thinking in terms of curating the connection queue for new data centre projects and distinguishing viable from non-viable projects, at least as regards grid connection.

Impact of the proposed changes

The consultation covers two proposals, both falling within the Curate pillar: (1) a new Data Centre Commitment Fee (DCCF); and (2) additional data centre specific “queue management milestones”.

DCCF

Data centre projects at or above 40 MW will need to secure a substantial fee in the form of a returnable security—proposed between GBP237,500 and GBP712,500 per megawatt (roughly 2.5% to 7.5% of average capital expenditure per MW). This reflects a significant increase in upfront financial commitment for developers seeking a grid connection—a 500 MW hyper-scale project might need to secure up to GBP356 million. 

This fee must be secured upon acceptance of the applicable grid offer (by way of a performance bond, letter of credit or cash deposit) and is only returned upon grid energisation of the connection point. The fee is forfeited if the project terminates or otherwise fails to comply with the requirements under the grid connection offer.

Projects that self-terminate before the offer is accepted, or before the fee regime is implemented, are not required to pay the fee; however, there is no proposed relief for projects that voluntarily cede a grid connection after having accepted an offer and secured the fee.

Queue management milestones

Relevant data centre projects will need to provide evidence at specific stages, demonstrating:

1. a credible end-user for the data centre
2. procurement of electrical equipment with long lead times, for example the switchgear and
3. developers with the requisite financial and technical capability.

Separate pathways are proposed for self-operated facilities and projects intended for lease or sale, reflecting the different commercial models within the data centre sector—with acceptance of pathway-appropriate evidence at each milestone stage. This will enable the applicable network operator to check whether a project is on track, at the right stage, and to impose penalties if it is not.

Further details of the proposals can be viewed on Ofgem's consultation page, with the consultation due to close on September 16, 2026. The proposals could be implemented by the end of 2026 if Ofgem elects to proceed and act quickly.

On a related note, our article UK: Reformed National Pricing and spatial energy plans examines the Government's Reformed National Pricing Delivery Plan, which sets out a package of reforms to Great Britain's wholesale electricity market aimed at supporting clean power ambitions and improving the efficiency of the future power system. 

It also considers the interaction between spatial energy planning and data centre demand, noting that NESO's Strategic Spatial Energy Plan methodology only spatially optimises 1–2 GW of locationally flexible data centres—raising questions about coherence with the AI Growth Zones programme and the scale of data centre demand now in the connections queue.

See also our recent Data center insights: the forces shaping the AI infrastructure boom, exploring seven themes shaping the future of the data centres sector.